Caldera, the then-owners of DR DOS, sued Microsoft in 1996. There was some speculation at the time it was a front. Microsoft thought so. Because not long after Microsoft settled with Caldera, Novell, the previous owners of DR DOS, came looking for more. Novell settled the most successful of its lawsuits with Microsoft on November 8, 2004.
Why Novell sued Microsoft
Before Windows NT 4.0, the biggest name in PC networking wasn’t Microsoft. It was Novell Netware. Novell had 70 percent of that market as of 1993, and built up an ecosystem that encouraged third parties to develop within it. A prime example of this is the NE2000 network card. Novell thought an inexpensive network card would help drive adoption, so they developed one, then gave the design away. It became a standard and was widely cloned for years.
That contrasts with its archrival. Microsoft wanted to own everything above the hardware layer. Microsoft had the operating system, but they wanted the network and the applications too.
Novell went on a shopping spree to build a software empire to compete with Microsoft. In March 1990, it tried to merge with Lotus, to bring the biggest name in spreadsheets together with the biggest name in networking. But the two companies’ shareholders fought over who would be the biggest fish in their newly merged pond, so the deal fell through on May 18, 1990.
Instead, Novell bought Digital Research for $136 million, followed by Wordperfect for $855 million and Borland’s Lotus 1-2-3 clone, Quattro Pro, for $145 million.
Novell’s empire that wasn’t
But rather than thrive, Novell’s empire withered away. Microsoft apologists said their software just worked better. I wouldn’t say that. My experience with Wordperfect vs Word was that Word made hard things easy but difficult things impossible. And Microsoft built a suite of second-best products that worked well together, while Novell struggled to integrate its acquisitions into a cohesive unit around its best-in-class word processor. But they did it by creating software APIs in Windows that they didn’t share with third parties until after their own software using those APIs was already on the market, ensuring Microsoft Office always had a head start.
Novell peaked as a $1.63 billion company in 1996 but it was clear they would forever be fighting Lotus, now a division of IBM, for whatever scraps Microsoft left behind. So in 1996, they started selling off acquisitions, cutting back to core networking. Corel bought the office suite, but paid just $115 million for it, less than Novell had paid for just the spreadsheet.
Novell’s litigation and denouement
And then the litigation began.
Caldera bought DR DOS for $400,000 and then immediately sued Microsoft. Ultimately Caldera and Microsoft settled in January 2000 for what turned out to be $280 million, $35 million of which Caldera gave back to Novell. Novell sued and later recieved another $17 million.
Novell sued Microsoft over its anti competitive takeover of the networking market, which Microsoft settled on November 8, 2004, for $536 million. Four days later, on November 12, 2004, Novell sued over anti competitive behavior in the office suite market. That litigation drew out for nearly a decade, ultimately ending in April 2014 when the Supreme Court refused to hear Novell’s appeal of the case.
In the end Novell received about $588 million on top of the $116 million they received for the sale of the distressed assets.
Microsoft’s cash reserves at the time were estimated at around $64 billion, so the activity had more of the effect of giving Novell a rebate on its acquisitions than it did on punishing Microsoft.
The Attachmate Group, a privately held software publisher best known for a systems management product called NetIQ, acquired Novell in 2011, ending its run as a publicly traded company.
David Farquhar is a computer security professional, entrepreneur, and author. He has written professionally about computers since 1991, so he was writing about retro computers when they were still new. He has been working in IT professionally since 1994 and has specialized in vulnerability management since 2013. He holds Security+ and CISSP certifications. Today he blogs five times a week, mostly about retro computers and retro gaming covering the time period from 1975 to 2000.